1998 (3) TMI 100 - HC - Income Tax

Summary

Issues Involved:
1. Whether an employment creating a relationship of employer and employee is a prerequisite for the applicability of section 80RRA.
2. Whether the petitioner is entitled to the benefit of section 80RRA or section 80-O.
3. The impact of amendments in section 80-O on section 80RRA.

Summary:

1. Employer-Employee Relationship Requirement u/s 80RRA:
The primary issue was whether an employment creating a master-servant relationship is essential for section 80RRA. The court referred to the Supreme Court's decision in CBDT v. Aditya V Birla [1988] 170 ITR 137 (SC), which held that the terms "employee" and "employer" in section 80RRA cover consultants and technicians. The court emphasized that the object of section 80RRA is to encourage earning and bringing foreign exchange to India, and improving the status of Indian professionals abroad. Therefore, the petitioner, a chartered accountant providing consultancy services, qualifies under section 80RRA even without a traditional employer-employee relationship.

2. Entitlement to Benefits u/s 80RRA or 80-O:
The petitioner argued for the benefit of section 80RRA, which provides a 75% deduction for remuneration brought into India, as opposed to section 80-O, which offers a 50% deduction. The court noted that if both sections apply, the petitioner is entitled to the higher benefit. The court cited CIT v. Indian Engineering and Commercial Corporation Pvt. Ltd. [1993] 201 ITR 723 (SC) and Collector of Central Excise v. Indian Petro Chemicals [1997] 11 SCC 318, supporting the principle that an assessee should receive the higher benefit when multiple provisions apply.

3. Impact of Amendments in Section 80-O on Section 80RRA:
The respondents argued that amendments to section 80-O impliedly repealed section 80RRA. The court rejected this, stating that the amendments did not nullify the Supreme Court's interpretation of section 80RRA in Aditya V Birla. The court emphasized that implied repeal is not presumed unless the provisions are irreconcilably inconsistent. Parliament did not expressly repeal section 80RRA, and both sections can coexist, allowing the petitioner to claim the higher benefit under section 80RRA.

Conclusion:
The court allowed the petition, quashing the impugned orders refusing approval under section 80RRA. It directed the respondents to reconsider the petitioner's application for approval under section 80RRA(2)(ii) in line with the court's interpretation within two months. No order as to costs was made.